The political and legal environment of England

Introduction

The United Kingdom is one of the few developed countries that enjoy political stability. The country provides vibrant and promising opportunities for foreign investors. It is the sixth largest economy in the world and second largest in the European Union. Like every country, the British government has implemented policies and regulations to streamline business activities within the country. In addition to this, Britain is also an active member of World Trade Organisation. This paper is divided into two parts. In the first part, Britain's political environment will be discussed. In the second part, a discussion on legal requirements for a firm, interested in starting a business in Britain will be presented (Daniels, 69).

Political Environment

The United Kingdom is a constitutional monarchy. But it is only symbolic in nature. There exists a parliamentary democracy in the country, with Prime Minister as the leader. The United Kingdom has always been a champion of free market economy. During the recent four years, from 2007 to 2011, Britain has become the most lucrative business destination for foreign investors. Although there are quite large number of American firms operating in the UK, there exist numerous opportunities for non-U.S. firms as well. Once the company has become operational, the government is responsible to protect the rights of local or foreign staff working in that particular company (Daniels, 69).

The recent banking sector reforms have enabled Britain to attract £23 billion in foreign direct investment. Thus during the four-year period, the country has emerged out as the leading business player. All the companies, whether local or foreign, are taxed alike at the same rate of 21 percent. The personal income tax rate is 20 percent. Political and economic stability is the hallmark of British investment culture. The Britain offers good opportunities to invest in the manufacturing sector. The pound sterling is a free-floating currency and is easily convertible with other international currencies (Dicken, 45).

The trend of inward investment has considerably helped local firms to protect their labour and financial resources. Britain refused to acknowledge the single currency regime, currently in practice in the European Union. This refusal provided Britain with a chance to improve conditions for business on her own. Due to prevailing political stability, investors are encouraged to come up with innovative ideas to boost foreign direct investment (Dicken, 45).

During the recent financial crises, the British economy was in turmoil. But due to some effervescent and result-oriented steps taken by the government, the economic condition is improving steadily. In recent years, the British economy has experienced an unprecedented boom in foreign direct investment, but the GDP growth has suddenly decreased. The continuously increasing unemployment rate, which currently stands at 7.7 percent, is a great challenge for the UK government.

The British Chamber of Trade and Commerce is at logger-heads with the government over the issue of stringent tax policies. In fact it has become the most debated issue in the British political and economic circles.

Legal Environment

In order to help companies ...